North East motor dealerships Jennings and Springfield Cars drive up sales and profits

Despite growing turnover 18%, Jennings' director Nas Khan described last year as "a game of two halves"

www.ianmacphotos.co.uk (l-r) Nas Khan, MD of Jennings Motor Group, John Mason from Mitsubishi Motors UK, and Norman Shepherd, franchise manager of Jennings Mitsubishi
(l-r) Nas Khan, MD of Jennings Motor Group, John Mason from Mitsubishi Motors UK, and Norman Shepherd, franchise manager of Jennings Mitsubishi

Motor dealers in the North East have reported a jump start in revenues and profits as a result of a strong market in both new and used car sales.

Stockton-based Jennings and Washington’s Springfield Cars both saw turnover increasing by 18%, despite challenges in the motors market that saw two high-profile closures in the region.

Jennings, which is one of the region’s most long-standing dealerships, saw turnover grow from £145.9m to £172.4m in 2014 – slightly faster growth than the previous year when sales rose by 17.35%.

Operating profit before exceptional items also rose at the group, by 9% to £1.35m, following a year when the group marked its first full year with its Kia franchise on what is known as Teesside’s motor alley, as well as the opening of its new Mitsubishi franchise in Middlesbrough.

Despite reporting the positive performance in its annual accounts, director Nas Khan said trading in the second half of the year had proved difficult.

In a review of the business within the account, Mr Khan said: “My 2013 report concluded with a footnote that 2014 had begun reasonably well and that early indications suggested it may not be as good as 2013. I think that was a pretty good summarisation of 2014.

“All in all, we had a reasonable and acceptable performance from all aspects of our business.

“New car sales across all franchises were strong in the first half of the year, but weakened during the second half, both in terms of demand and margin retention.

“Unfortunately the manufacturers don’t always see it like that so the targets were both difficult and very stretchy. This made life fairly difficult for the second half of the year.”

Mr Khan, who started work for Jennings as a 22-year-old university graduate 32 years ago and now owns the company, said fleet sales were strong throughout the year, which helped to produce the overall good performance across all new car and commercial sales.

Within used cars, a strong start to 2014 became more challenging and weakened off in the second part of the year.

“Used car sales really was a game of two halves,” said Mr Khan.

“This was primarily down to oversupply of used cars which makes residual values weak. Also, the push from manufacturers for new car sales makes life very difficult on used car sales.”

Mr Khan said the new Mitsubishi franchise in Middlesbrough “started slowly but I do feel that Mitsubishi are ahead of the game in the field of electronic technology and will be a major player over the next few years, both in hybrid and electric vehicles.”

The services and parts division performed well which, the managing director said, was “a pleasant surprise as this was becoming an area of concern”.

Since the year end the group, which created 21 jobs in the period to take the workforce to 410, bought a further two units next to the Stockton Kia dealership, but decisions on their use have not yet been decided.

Washington-based Springfield Cars Ltd also reported an 18% turnover lift in 2014, going from £43.2m to £50.9m, following what it described as an “exceptional” 2014.

The firm, which employs 98 people, operates three Gateshead franchises for Fiat, Citroen and Suzuki, an accident and repair centre in Washington, a Citroen and Fiat authorised repairer also based in Washington and a National Fleet operation in Gateshead. It posted an 84% rise in pre-tax profit, from £463,430 to £850,830.

Directors added: “The directors anticipate that the trading environment will continue throughout 2015 in the same manner as at the end of 2014.”

The dealerships’ success came in a year that the used car sector saw the demise of Gosforth-based Tyneside Autobuy, which collapsed with the loss of 48 jobs.

At the start of May, the national chain Carcraft, which had a showroom in Birtley, was placed into administration with the loss of 500 jobs across the country.

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